3
The discussion in Chapter 2 of what the NAFTA is and what it is not skirts a larger set of questions about what North America is. That sounds like a debate for a different book, but is not inconsequential here, since the answer to that question has fuelled the politics of the NAFTA itself. In the context of trade, North America is most simply expressed as the three parties to the NAFTA. Yet, geographically, North America is quite a bit broader. According to the National Geographic Society, the continent of North America
extends from the tiny Aleutian Islands in the northwest to the Isthmus of Panama in the south [and] includes the enormous island of Greenland in the north east and the small island countries and territories that dot the Caribbean Sea and western North Atlantic Ocean.
Moreover,
North America can be divided into five physical regions: the mountainous west, the Great Plains, the Canadian Shield, the varied eastern region, and the Caribbean. Mexico and Central America’s western coast are connected to the mountainous west, while its lowlands and coastal plains extend into the eastern region.1
Neither Panama nor Greenland is part of the NAFTA, nor is the Caribbean. For a short time after the NAFTA’s completion, in 1994, the Free Trade Area of the Americas initiative contemplated the extension of NAFTA-like trade rules to most of the Western Hemisphere. Yet even the FTAA would not have included Cuba (democracy was a condition of entry) or Greenland, a semi-autonomous part of Denmark.
Within each of the NAFTA countries, for example, we can point to numerous examples of “regionalism” affecting domestic politics: the US Civil War and its long-term impact on the American South; Canada’s challenges with threatened independence by Quebec or with western alienation; or Mexico’s struggles with restive parts of its underdeveloped southern states. Each suggests a social, political or economic distinctiveness at the subnational level important for understanding the function of the larger polity. That all three have unique experiences with federalism suggests they remain in the midst of a grand experiment with how to knit large geographies and diverse populations into a cohesive national structure.
North America’s current political boundaries are arbitrary lines on a map set after a mix of European conflict in the eighteenth century, and continental expansionism, civil war and revolution in the nineteenth century. In 1981 Joel Garreau rethought North America’s divisions in terms of culture and shared values, coming up with nine distinct nations inhabiting the continent (Garreau 1981). When we think about North American regionalism, there might be broad agreement on Quebec or Dixie (the US South) being uniquely regional. Yet Garreau importantly argues that North America is a collection of regions, divided by, but more often transcending, political lines on a map. South Florida, for example, has less in common with the continental mainland than it does with most Caribbean islands – which, in the context of trade, are never described as being part of North America.
Garreau is hardly the only one to point out these incongruences of political lines with how people actually interact economically, politically and culturally – a major theme of scholarship on post-colonial Africa or the Middle East. Looking at North America as a whole, Garreau was also not the last to view North America through the lens of regionalism. In 2011 Colin Woodard generated a regional depiction of North America strikingly similar to Garreau’s, adding two regions (11 rather than Garreau’s nine: Woodard 2011), renaming a couple of others (see Table 3.1).
Regionalism is one of the murkier concepts tossed around by political scientists, frequently lacking clarity and specificity. Depending on where and how it is applied, “regionalism” has quite different meanings and implications: everything from metropolitan planning to localized or cross-border economies and culture. This murkiness extends to areas such as citizenship and identity, over which considerable scholarly ink has been spilled on the constructions underwriting what it means to be American, Canadian, Mexican, or whether there is an emerging identity that might be termed North American (De la Peña 2006; Song 2009; Kymlicka 2003; Earle & Wirth 1995).
A further definitional and conceptual complication around “region” stems from the stream of international political economy literature known as “the new regionalism”, which emerged in the early 1990s (Kahler 1995; Bhagwati 1992; Ethier 1998; Bowles 1997). This literature’s emergence was not coincidental, since it aimed to describe and understand the proliferation of formal economic arrangements such as the NAFTA. The template frame of reference for much of this literature was the European project, but with a heavy emphasis on the economic case for integration: efficiency gains, growth, supply chains, institutions (Loughlin & Keating 2013).
Table 3.1 Regionalism in North America
Woodard’s 11 rival regional cultures |
|
Ecotopia The Empty Quarter MexAmerica The Breadbasket Quebec The Foundry Dixie New England The Islands (including south Florida) |
The Left Coast The Far West El Norte First Nation The Midlands New France (Quebec and southern Louisiana) Yankeedom New Netherland Greater Appalachia Tidewater Deep South (South Florida part of the Caribbean) |
Sources: Garreau 1981; Woodard 2011.
Hence, when scholars ask whether North America exists, they are often talking past one another about different aspects of the complex of elements that could conceivably define a “region”, often complicating the debate over the NAFTA’s contribution to the topic. Defined in terms of the new regionalism literature, the NAFTA is sometimes exhibit A in the discussion of regionalism. However, if a “region” is defined in broader historical, cultural or political terms, the NAFTA’s role in augmenting or undermining the concept becomes more contestable.
This chapter cannot definitively sort through whether North America is a cohesive region, broadly defined. However, what follows aims to situate the NAFTA, and the politics that flows from it, in some of these broader debates about regionalism. Moreover, what follows will focus on the NAFTA as part of the “architecture” of region as it has evolved in North America over the postwar period.
The NAFTA’s multilateral origins
The rapid deepening of the European project with the 1992 Maastricht Treaty and the subsequent advent of the NAFTA in 1994 were important focal points for scholars interested in regionalism. Yet the seeds of the new regionalism were not actually “new”.
Table 3.2 Percentage of total exports to regions of the world, 2010 and 2017
2010 |
2017 |
|
North America (exports to) |
||
North America |
49% |
50% |
Asia |
21% |
22% |
European Union |
17% |
16% |
European Union (exports to) |
||
European Union |
71% |
69% |
Asia |
9% |
11% |
North America |
7% |
9% |
Source: World Trade Organization, “World and Regional Merchandise Export Profiles”, statistics on merchandise trade: www.wto.org/english/res_e/statis_e/merch_trade_stat_e.htm (accessed 10 June 2019).
In 1985 Canada and the United States advanced their own project in regional integration with the launch of free trade talks. The institutional origins and rationale for allowing regional trading arrangements as part of the multilateral trading system were outlined in Chapter 1. Article XXIV of the General Agreement on Tariffs and Trade codified and sanctioned the presence of inherently discriminatory preferential trading arrangements within a multilateral system that was supposed to be non-discriminatory, but justified it with the broader goal of creating more trade.
Yet are trading arrangements like those justified under article XXIV necessary, sufficient, or neither when we think about regionalism? Table 3.2 depicts a common measure of regionalism anchored in comparisons of intra-regional versus extra-regional export levels for 2010 and 2017.
In 2017 fully 50 per cent of North America’s exports went to other North American countries, with much smaller percentages destined for other parts of the world. By comparison, 69 per cent of exports from European Union members went to other EU members. Since a greater share of EU member exports are connected to other EU members than is the case in North America, this is just one indicator that Europe might be relatively more coherently “regional”.
Yet how much of the story of regionalism is actually indicated by trade statistics alone? Confusing matters further, the definition of North America used by the WTO in Table 3.1 includes “Bermuda, Canada, Mexico, United States of America, Other territories in the region not elsewhere specified”. Bermuda? Hence, the NAFTA may be a regional trading arrangement under article XXIV, but does that make it a distinctively cohesive region or simply a component of some larger, perhaps even less coherent concept of region? Did the additional trade and investment stimulated by the NAFTA add to an existing base of regional activity, polity or identity of some description, or was it really a small building block in a concept of North America as region that does not actually exist?
The NAFTA was an important building block of an architecture with uniquely North American qualities. However, this chapter argues that the NAFTA represented the zenith of regionalism in North America and that the new US–Mexico–Canada Agreement negotiated in 2017–18 is merely the latest nadir in a steady descent away from the idea of “region”.
North America, two views
Views on North America and regionalism and NAFTA as a component, underwriter or driver of a North American region are inseparable. Indeed, if one is disposed towards thinking of North America as a coherent collection of states with a host of commonalities that can easily be augmented by the idea of “region”, the NAFTA is seen as an important institutional down payment underwriting the foundation of region beyond a set of trade rules (Pastor 2011). On the other hand, scepticism about the overlap or commonality among the diverse cultures, politics and stages of economic development among the NAFTA’s members fuels criticism of the NAFTA as both the only real foundation of trilateral connection and a profoundly inadequate one (Clarkson 2008).
Two views on institutions
It is important to at least acknowledge that there are more than two views on the NAFTA’s institutions and their influence on North America as a region. Especially corrosive politically have been the exaggerated – intellectually dishonest – claims about the NAFTA that emerged from the populist right in the United States in the early 2000s. Particularly potent were the claims of certain television pundits who argued the NAFTA and its successor initiatives – notably the 2005 Security and Prosperity Partnership – were underhand efforts by elites to destroy US sovereignty, impose a never specified global government, pave a 12-lane super-highway through the middle of the continent and throw open labour markets to low-cost competition (i.e. immigration).
Analysts can, and do, cringe at all of these, since no serious examination of the NAFTA, the intent of the agreement’s negotiators or efforts to build upon it would lead to such conclusions. Unfortunately, such populist distortions have gained traction in the political vacuum left by those unwilling to defend the NAFTA’s merits or note how institutionally shallow it is.
More serious analysts of North American integration are agreed on at least one facet of the NAFTA as underwriter of North America as a region: that the NAFTA has too few institutions to foster in North America anything approaching the idea of “region” (Pastor 2001; Capling & Nossal 2009; Studer 2008). Yet this agreement on the lack of institutions in the NAFTA then diverges over the implications of their absence.
For proponents of the NAFTA, the absence of more institutional structures represents a significant failure of vision and courage on the part of North America’s leadership to capitalize upon a convergent set of values held by populations in all three countries. The absence of governance mechanisms to deal with the substantial agenda initiated, but never completed, by the NAFTA left important governance holes in the agreement that served only to open additional doors for critics to assail the entire premise of the agreement. If it was not the abject absence of governance institutions, it was often the weakness of those that were created that undermined the utility of the NAFTA as a significant step forward in the development of North America as a region. For example, the structure of the much-hyped dispute settlement mechanisms around antidumping duty (AD) and countervailing duty (CVD) (NAFTA chapter 19) was, in fact, so limited in scope that they are either unsatisfactorily slow in, or incapable of, resolving important disputes, notably Canada–US trade in softwood lumber (Anderson 2006; Gagne 2003).
On paper, the NAFTA’s state-to-state dispute settlement provisions (chapter 20) ought to elevate intractable disputes above more technocratic forms of adjudication, and give them political profile and attention appropriate for partners in an integrated marketplace of their mutual design. Yet, as Chapter 6 of this volume will detail, the state-to-state dispute process has proved even more unsatisfying (Carbaugh 2011).
The other view is that the lack of institutional structure within the NAFTA was largely driven by corporate influence over the design and outcome of the negotiations. It was, in this view, a spectacular success in terms of a radical overhaul of the North American economic space in areas well beyond standard liberalization of trade and investment rules. Indeed, the NAFTA broke new ground in areas such as energy, telecommunications, patent protection and services, which had yet to be fully incorporated within the multilateral system. Moreover, any effort to more deeply institutionalize the future governance of these issue areas in the public interest was actively opposed by those corporate interests whose actions would most likely be disciplined by such institutions. The most prominent of these issue areas in which institutionalization efforts were stalled, short-circuited or watered down were labour and the environment, embodied, first, by being addressed outside the formal text of the NAFTA and, second, by their profound institutional weakness (Clarkson 2008).
The European Union as region versus North America as region
Those who complain about the institutional weakness of the NAFTA in nudging North America towards something more obviously recognizable as “region” could reasonably be taken to task for being impatient. The first reason to temper expectations revolved around the earlier discussion of the fuzzy conceptual and definitional aspects of what “region” or “regionalism” even are. Analysts can argue over whether a wide range of connective tissue between different polities – political, cultural, diplomatic, military, geographic, formal or informal, local or global – are necessary, sufficient or adequately robust to justify the “regional” label (Börzel & Risse 2016; Shaw, Grant & Cornelissen 2011; Kupchan 2010; Keohane & Nye 1977).
These debates will continue, but, when analysts speak of regionalism in the context of globalization, they are most often referring to the rapid expansion of regional trading schemes like the NAFTA. Indeed, the NAFTA was significant in terms of the size of the economies it began knitting together, but it was hardly alone. Many others joined the party. As of January 2019 the WTO reports that more than 290 regional trade agreements are in force, the overwhelming majority of them coming into existence after 1990.2
Whether one is sceptical of North America as a region, frustrated by the lack of NAFTA-centred progress towards that end or terrorized by the thought that the NAFTA has driven the continent too far down that road, one would do well to return to the comparison with Europe. Doing so is even more important if the development of robust institutions is considered a necessary condition for regionalism. The punchline here is simple. Although many analysts consider Europe as anchored by the European Union to be the quintessential form of regional governance, many questions about Europe as a region remain unanswered and the focus of ongoing debate. Moreover, the European project has been nearly a century in the making, evolved in fits and starts, confronted multiple challenges along the way and is currently confronting a future without the United Kingdom.
In other words, Europe and North America share one important commonality as regions: they are works in progress.
Humble beginnings
The regional integration of Europe and North America share quite different political and historical origins, but are remarkably similar in the relative modesty of their beginnings. Put differently, both sides of the Atlantic started small: Europe with a small group of countries and a specific industrial sector, North America with just three countries and a shallow preferences agreement.
The political origins of the European Union are directly traceable to the ashes of the Second World War. For many, the economic and political nationalism of interwar Europe was a causal antecedent of the horrors of the war. Diplomats, economists and political scientists puzzled over how to reconfigure relationships between states that would restrain impulses towards armed conflict (Deutsch 2015; Haas 1961; Keohane & Nye 1977). Jean Monnet, now considered one of the intellectual and political champions of European integration, picked up on many of the arguments pointing to the salutary effects of shared economic activity – a core element of what became popularized in the 1970s as “interdependence theory” – and directed them towards Franco-German relations (Fransen 2001; Duchêne & Monnet 1994).
The practical application of this line of reasoning was the 1951 European Coal and Steel Community, Europe’s first supranational governance project, binding Belgium, France, Italy, Luxembourg, the Netherlands and West Germany to collective decision-making in the production of coal and steel.3 Importantly, the ECSC was an integration arrangement limited to a specific economic sector. The governing institutions were supranational, but nevertheless still limited to a single sector.
From rather modest beginnings, Europe has evolved through a number of the stages of economic integration detailed in the previous chapter. Importantly, this evolution has been neither inevitable nor uniform. The 1957 Treaty of Rome broadened and deepened the integration of the same six countries by transforming the ECSC into a common market (complete factor mobility). The first expansion of the European Economic Community (EEC) did not happen until 1973, when Denmark, Ireland and the United Kingdom signed on. Shortly afterwards, in 1975, the EEC operationalized some initial thinking about “region” and how to stimulate it within Europe by creating the European Regional Development Fund (ERDF), with a focus on reducing economic disparities between different geographic areas of the EEC.
By 1986, and the signing of the Single European Act, EEC membership stood at ten. Then, in the aftermath of the Cold War, there was a flurry of important agreements – Maastricht Treaty (1993), Shengen Agreement (1995) and Lisbon Treaty (2009) – adding to its membership, deepening the single market, introducing a single currency, providing for passport-free travel and moving ever closer to political union.
The European project is more than six decades in the making, began with just six members (now 28) and broadened, deepened and expanded its membership in fits and starts. Moreover, it has not been a smooth linear process. Indeed, Europe seemed on the precipice of adopting a continent-wide constitution in 2004 that would have consolidated a number of extant treaties into a single document. Final adoption required the proposed European constitution be put to a series of national referenda. Through mid-2005 18 countries had ratified the new constitution. However, in May 2005 voters in France and the Netherlands rejected it (Hurrelmann 2007; Bailey 2008). This particular defeat eventually gave way to the approval of the more modest Lisbon Treaty in 2009, but the point is that the European Union has been long in the making, at times incremental, at others bold, and has also suffered a number of setbacks, the most serious of which is the United Kingdom’s intention to withdraw from the union.
North American parallels
Interestingly, North American regionalism, defined in terms of a focus on government-directed integration projects, has several similarities to what we have observed in the European project. Much as the European Union’s origins can be found in a much more limited sectoral agreement among just six countries to manage coal and steel production, North American regionalism can similarly be traced to much more limited initiatives, focused in this case on the United States. Specifically, in 1965 Mexico initiated a number of economic reforms aimed at stimulating what became popularly known as the maquiladora sector (Schechter & Brill Jr 1991; Schwartz 1987; Weintraub 1990: 11–26). Mexican reforms were mostly aimed at attracting investment, especially American investment, to the country’s northern tier. It was a successful effort, which transformed northern Mexico’s industrial capacity, making the region a de facto arm of US manufacturing (Taylor Hansen 2003). Although the origin of these reforms was domestic, the tacit approval and participation of American multinationals utilizing low-cost Mexican labour in the assembly process meant that US and Mexican supply chains were becoming increasingly intertwined. In the same year, 1965, Canada and the United States formalized the terms of the Auto Pact, a scheme that dramatically reorganized and integrated auto manufacturing between the two countries (Anastakis 2000). Indeed, the liberalization of trade in auto manufacturing gave rise to countless parts manufacturers and suppliers to the sector and virtually eliminated the importance of the border in terms of the final assembly of vehicles. By the early 2000s it was common for public officials to claim that just-in-time manufacturing had become so finely tuned that the manufacturing for a single vehicle meant the components therein crossed the border multiple times in the assembly process (Anastakis 2001).4
Yet, apart from the general period in which the integration initiatives began, and the fact that they were sectoral, the parallels between Europe and North America become more difficult to sustain. First and foremost, the intellectual and political impetus for the ECSC in 1950 was a desire not to repeat the mistakes of the interwar years, by enmeshing former adversaries inside a supranational institution that would collectively direct a major source of industrial activity. Although North America has not been immune to conflict – notably the Mexican–American War of 1846–48 and the 1916–17 US intervention in pursuit of Pancho Villa – none has approached the destructive scale of Europe’s two twentieth-century conflicts. Moreover, each of the three eventual NAFTA partners had narrow, domestic motivations for the initiatives they pursued in the years leading up to 1994.
Europe has also made incremental, at times dramatic, progress in advancing integration towards ever deeper stages of integration encompassing more and more members. In North America there has always been “talk” of moving to deeper stages, but seldom any real action in building upon the success of the Auto Pact. Ronald Reagan made a vague reference to pursuing a “North American accord” as he announced his run at the US presidency in 1979, but few knew what exactly he meant and most dismissed it as a kind of filler to begin his campaign (Cannon 1991: 461). North America’s march towards regionalism seemed to have had a breakthrough or two in the late 1980s and early 1990s, with the advent of the Canada–US Free Trade Agreement (1988) and the NAFTA (1994) – perhaps the realization of Reagan’s “North American accord”? Yet, after expending political capital to win congressional approval for the NAFTA, the Clinton administration seldom mentioned it, and certainly spent no additional capital to advance its built-in agenda. Instead, scholars spent most of the next two decades highlighting the merits and challenges of advancing the NAFTA more robustly towards a more integrated and cohesive “region” (see, e.g., the C. D. Howe Institute’s “Border Papers” series, notably Dobson 2002; Robson & Laidler 2002; Goldfarb 2003). Even attaching security to the North American economic agenda after the September 2001 terrorist attacks on the United States failed to significantly reanimate progress, incremental or otherwise, towards deeper forms of “regionalism” (Ackleson & Kastner 2006; Ackleson 2009; Anderson & Sands 2007).
However, just months after Donald Trump’s election as president of the United States, his threat to withdraw from the NAFTA concentrated minds and refocused attention on both the agreement and what the threat meant for North America as a region. Indeed, the populist rhetoric of the 2016 US presidential campaign, much of it directed at supposed flaws with the NAFTA (the “worst agreement ever”) and Mexico, cast a pall over the negotiations. Rather than looking for ways to advance, deepen or “fix” the alleged ills of the NAFTA, the renegotiation process was mostly defensive in nature, an effort to prevent the erosion of the NAFTA’s benefits rather than an attempt to build upon them.
A number of the institutional oddities in the transformation of the NAFTA into the USMCA are given deeper treatment elsewhere in this volume: the dual bilateralism in dispute settlement, complicating rules of origin with new wage provisions, and the contrast between leaving temporary entry intact while augmenting environmental protections. Yet it was, arguably, in the renegotiation process itself that the contrast between the NAFTA and USMCA is most revealing about North America as region.
By the fall of 1991 American negotiators had become frustrated with the slow pace of NAFTA negotiations (Cameron & Tomlin 2000). This was not at all unlike the frustration expressed by the Trump administration throughout the course of 2018 at the similarly slow pace of renegotiation. The parallels between the two periods extend to a number of negotiating pressures imposed by legislative and electoral calendars in one or more countries. However, the similarities end there. In mid-February 1992 the three parties met in Dallas, Texas, for what became known as the “Dallas Jamboree”. It was a multi-day, face-to-face negotiation over all issues at once that had never been attempted before. The “Dallas Jamboree” did not complete the NAFTA negotiations, but did result in a set of important breakthroughs on a number of difficult issues that paved the way for completion of the full text by the fall of 1992 (Cameron & Tomlin 2000: 108).
The regional symbolism of organizing a complex, trilateral “jamboree” suggested a commitment by all three countries to the conclusion of the talks. The renegotiation of the NAFTA in 2017–18 was very different, and occurred against a backdrop of withering, non-stop criticism of Mexico by Donald Trump over trade and immigration, starting with the announcement of his candidacy for president. If the NAFTA was (according to President Trump) the “worst agreement ever negotiated”, the US–Mexican relationship within it was the most problematic.
Canada and Mexico have always had an uneasy, at times challenging, courtship (Stevenson 2000; Daudelin 2003; Castro-Rea 2016). Indeed, an important motivation for Canada being at the NAFTA table was not out of a philosophical commitment to, or vision of, “region” but to make sure Mexico did not get a better deal than Canada had achieved with the United States just a few years beforehand (Pastor 2011).
However, between late 2017 and the spring of 2018 Canada and Mexico maintained a united front: the NAFTA renegotiation was to be trilateral. Then, in the summer of 2018, Canada disappeared from the negotiations while Washington and Mexico City worked on issues that were supposedly unique to their relationship. Canadians vigorously asserted that they remained in regular touch with their US and Mexican colleagues about progress in their discussions and would rejoin the talks at the appropriate time. Then, on 27 August 2018, the United States and Mexico announced they had reached an agreement, suddenly putting significant pressure on Canada to do similarly. When process is considered alongside the final, arguably patchwork, text, it is not a stretch to suggest that North America as region has less of a trilateral foundation anchored in the USMCA than it did under the NAFTA.
Asymmetries of power
Many analysts of North American integration note the stark asymmetries among the three NAFTA countries. Indeed, the asymmetries are everywhere, and rather easily identified. What’s interesting about most of those analyses is how seldom they disaggregate the components of such a defining characteristic of North America (Andreas 2005; Clarkson 1998). In what ways does it matter that the US economy is more than 16 times as large as either of its NAFTA partners? How exactly is the exponentially larger US military budget important in the context of trade negotiations around rules of origin? Are Canada and Mexico under any real threat of having military action directed at them because of the failure of trade negotiations? Certainly not. However, the depth, breadth and power of America’s consumer market, Canada’s and Mexico’s dependence on it as an export market and, of course, the threat of market closure or restriction are existential challenges to both the smaller economies.
For a variable that is advanced as foundational to the politics and economics of North America, surprisingly little scholarly attention has been paid to where asymmetries of power exist, in what policy domains or in what ways they matter (Anderson 2019). Scholars have nevertheless pointed to the asymmetries of power in North America as a structural impediment to deeper stages of integration (Clarkson 2008). Asymmetries of power exist within the European project, they argue, but none are as stark as those found in North America. The result is a basic starting point for Canada and Mexico of structural weakness in dealing with Washington that cannot be overcome with institutions. Moreover, with so much power accruing to just one North American state, how, these scholars would argue, are Canada and Mexico going to make the case for supranational institutions that would pool power and sovereignty? The United States is unlikely to agree to create new trilateral institutions that would water down its relative power advantage (Anderson 2016). The more likely scenario is that any pooling of sovereignty in North America would come only at the expense of Canadian and Mexican sovereignty. North American monetary union, for example, would not entail the creation of an entirely new currency like the euro (some have termed such a thing the amero) (Courchene & Harris 2000; Chriszt 2000; Grubel 2000). Rather, Canada and Mexico would likely just end up adopting the US dollar but with uncertain input into the governance of the US Federal Reserve.
Others see things very differently, arguing that a general convergence of economic and political values among the populations in each NAFTA country suggests they may be more receptive to closer ties (Pastor 2011: 59–73). Moreover, the main problems confronting closer ties are not found in asymmetries of power, resistance to more cooperation or a reluctance to pool any sovereignty but a failure of political leadership and imagination (ibid. 73–9).
Asymmetries of power are everywhere. In fact, asymmetries of power are often the very basis upon which negotiations proceed: one party invariably “needs” something from the other. Moreover, the proposition that perfect symmetry in negotiations leads to better outcomes does not have much empirical support (Zartman & Rubin 2000: 272). Hence, some scepticism about the “asymmetries-as-impediment” to integration is merited. Table 3.3 draws several indicators of human development from the United Nations applied across a group of EU and NAFTA countries. While it is clear that the gaps between Mexico and its NAFTA partners on a number of indicators are significant, there are also important asymmetries among European states: Germany and Greece in per capita income, France and Germany on income inequality (GINI), Italy and Poland on life expectancy.
Table 3.3 Select human development indicators
Source: United Nations Development Programme (2018).
Moreover, those asymmetries extend to regions within those same countries. Table 3.4 depicts the extreme ends of subfederal, regional development among the same list of countries compared throughout the OECD. For example, on public health the province of British Columbia ranks highest in Canada and is within the top 20 per cent of all OECD regions on the same measure. By contrast, Canadians living in the Territory of Nunavut rank near the bottom of the OECD in terms of public health. Similarly, the Aosta Valley region of Italy is among the safest in the OECD while Sicily is, dubiously, among the most dangerous.
Another important point flowing from the regional differences depicted in Table 3.4 is that underdeveloped regions can be found on both sides of the Atlantic, and in countries with otherwise high human development values. For example, it might not come as a surprise that Chiapas, Mexico, ranks low on access to education and income relative to many other OECD regions. However, Italy has the largest disparities in the OECD on safety and all 13 Greek regions are in the bottom 10 per cent of the OECD in terms of access to jobs.
Smoothing the asymmetries
An important difference between European regionalism and what has transpired in North America is the degree to which resources have been dedicated to reducing some of the asymmetries among and within members. Specifically, the European project has always been aimed at making its membership more of a cohesive whole with every expansion or deepening stage of integration. Just a year after the 1957 Treaty of Rome rechristened and deepened the ECSC as the European Economic Community, the European Social Fund was created as a means of managing the transition away from the forms of economic nationalism that establishment of the EEC would entail.5 In 1974, just a year after the addition of three new countries, the EEC put in place the European Regional Development Fund, which began transferring large sums of money from wealthier parts of the community to poorer areas. And, finally, the 1993 Maastricht Treaty put in place the Cohesion Fund, aimed at reducing economic and social disparities in areas where gross national income per person is less than 90 per cent of the EU average.6 Between 2014 and 2020 the European Union estimates that regional policy transfers will account for more than 30 per cent of the European Union’s entire budget, by far the largest single component of EU spending (Directorate-General for Communication 2014: 3).
Table 3.4 Select within-country regional disparities (highest and lowest)
Notes: Region pairs on each dimension represent the extremes within country. Except where indicated, e.g., “(middle 60%)”, each region falls within either the upper 20 per cent or lower 20 per cent of all OECD country regions.
Source: Organisation for Economic Co-operation and Development, “Regional well-being” database: www.oecdregionalwellbeing.org (accessed 10 June 2019).
North America is a very different story. Each of the three NAFTA countries has unique experiences with federalism that entail, to varying degrees, funding transfers from one level of government to another in pursuit of a variety of policy objectives. Canada, in particular, has an equalization payments scheme aimed at levelling a number of economic disparities between “have” and “have not” provinces. According to Canada’s Department of Finance, federal transfer payments to the provinces will total nearly C$80 billion in 2019/20, with more than C$2 billion going to both Nova Scotia and New Brunswick in the form of “equalization” payments while Alberta and British Columbia will receive no such “equalization”.7
Indeed, although advocates of periodically called for some form of North-America-wide regional funding mechanism to be put in place, none ever has. Soon after his election to the Mexican presidency, in 2000, Vicente Fox put forward a number of proposals to revive the NAFTA and give North American integration a shot in the arm, among them a “cohesion” fund, presumably along the lines already established in Europe (Pastor 2011: 153–4; 2008). The NAFTA, of course, got off to an ominous start in January 1994 when the Zapatista rebellion was launched specifically to coincide with implementation. The Zapatistas’ cause was, in part, to draw attention to the disparities of wealth between Mexico’s relatively wealthy industrial north and its more underdeveloped south, which many believed were being exacerbated by the rapid liberalization represented by the NAFTA (Rich 1997; Stahler-Sholk 2007). Some form of social cohesion programming to coincide with the NAFTA’s implementation might have gone some distance to mute a set of longer-term critiques about the adjustment costs of trade liberalization, but certainly would have limited the political damage done by the Zapatistas.
One very limited effort to establish some form of regional development fund was the North American Development Bank (NADBank). Although the NADBank was created on the same day as the NAFTA was implemented, 1 January 1994, the two institutions are only connected by the expectation of increased trade and industrialization along the US–Mexican border flowing from the NAFTA. Indeed, the purpose of the NADBank was to fund a variety of projects related to environmental sustainability limited to the region along the US–Mexico border (Hinojosa-Ojeda 1994; Perwin 1997). Unfortunately, the NADBank’s limited construction restricted its potential as part of the architecture underwriting North America as a region. For starters, the bank’s mandate to provide funding for projects within narrow strips of territory on either side of the US–Mexico border did nothing to address broader regional disparities. Second, its mandate around environmental degradation and sustainability linked to trade-related production were also limiting. Finally, the NADBank has only ever been a US–Mexico venture, in spite of Canada having been invited on many occasions to join (Pastor 2011: 152).
It is debatable whether North America’s asymmetries inherently preclude moves towards deeper stages of integration and a more cohesive regionalism. Scholars have either assumed these asymmetries are impediments or not looked very deeply into how such asymmetries have functioned. Yet it is also true that the European project’s explicit efforts to construct regional cohesiveness necessitated a robust financial commitment to make it happen that has never seriously been considered in North America.
In addition to regional development and social cohesion funding, the European Union spends considerable amounts of money effectively studying itself. In the late 1980s the European Community provided funding to establish more than 160 European Centres of Excellence, nearly 900 Jean Monnet Chairs and many more teaching and research modules at universities around the world (Yang 2015). The Monnet Chairs and EU Centres of Excellence are part of the European Union’s larger Erasmus+ programme, aimed at facilitating educational mobility, which in 2017 had a budget of €2.7 billion, supporting more than 700,000 students in education, work or volunteer experience abroad.8
The Monnet Chairs and Centres of Excellence are aimed at broadening the study of integration in the European Union, including spreading interest in such studies within university curricula. In 2017 alone 55 new Monnet Chairs and 18 new Centres of Excellence were created around the world (Directorate-General for Education 2018). Between 2012 and 2018 the Erasmus+ programme awarded 16 Monnet Chairs (nine in Canada, seven in the United States, one in Mexico) and created 14 Monnet Centres of Excellence (three in Canada, 11 in the United States) to North American researchers and universities (European Commission 2019).
The contrast with North America in terms of the educational study of the region could not be greater. There are no state-backed efforts in any of the NAFTA countries targeted at research into North America as a region. Academic enthusiasts of North American studies have attempted to create programmes, research centres and a variety of research consortiums to advance the study of North America as region, but few of them were ever trilateral in orientation – most focused narrowly on one of the two bilateral relationships, or on specific problems – and many of those have disappeared in recent years.
The Center for North American Studies at American University in Washington, DC, has been downsized into a research initiative within the Latin American and Latino Studies programmes.9 The Center for Transborder Studies at Arizona State University has been turned into a formal school, but has also refocused primarily on the US–Mexican border.10 And the Centro de Dialogo y Analisis sobre America del Norte (CEDAN), located at the Mexico City campus of Tecnologio de Monterrey, had disappeared entirely by 2011. The Woodrow Wilson International Center for Scholars in Washington, DC, maintains separate programmes for Canada and Mexico, but nothing North American apart from periodic collaboration between the two. Interestingly, one of the more robust of the remaining research centres dedicated to North America is not even in North America: the John F. Kennedy Institute for North American Studies at the Free University of Berlin, founded in 1963.11
In 2000 the government of Canada established the Canada Research Chair (CRC) programme to incentivize the attraction and retention of university-based researchers and enhance knowledge and competitiveness in a wide range of disciplines and subdisciplines of importance to Canada. There are currently more than 1,800 Canada Research Chairs. A search of the database of CRCs and their areas of research reveals that not one is dedicated to understanding North American integration, Canada’s relationship with its most important trading partner, or the United States itself.12 The contrast with EU efforts to educate and stimulate research in European studies could not be greater. In 2017 there were eight Jean Monnet Chairs based at Canadian universities.13
This phenomenon was compounded in 2012 when Ottawa cut all Canadian studies funding in the United States, a considerable amount of which went to the study of North American integration. Among the casualties of this funding cut was Duke University’s Center for Canadian Studies, established back in 1974, and the significant diminishment of the Association for Canadian Studies in the United States (ACSUS).
Whither regionalism?
Until recently the two basic views of North America as a region contended with each other for a kind of dominance. The first was forward-leaning and optimistic, sensing possibility in the broad convergence of values among the people of all three countries (Pastor 2011: 56–79). In this view, the failure to move North America towards something more coherently “regional” is the result of a lack of leadership and courage, which only ever produces incremental change seldom noticeable to the general public.
The more pessimistic view sees much more ambition in the existing NAFTA project, but only for select commercial interests that insisted on rewriting rules but also pressured governments to limit the agreement’s governance and transparency. As Stephen Clarkson (2008: 454) concludes in Does North America Exist?, North America is and is not the following.
• It is an identifiable geographic entity, although Hawaii seems an incongruous extension, and Russia may be challenging the exact location of the continent’s legal margins in the Arctic.
• It is not a community in the sense that Mexicans, Americans, and Canadians think of themselves primarily as members of their continent. Among civil society organizations, trinational continentalist activism is a rarity compared to the much more common global engagement of international oriented non-governmental organizations.
• It is a new, if weak, legal-institutional reality with thousands of powerful norms and rules whose long-term effectiveness is being vitiated by institutions too ineffectual to adapt the continent’s collectively changing circumstances.
• It has some coherence as a market, particularly in those economic sectors that are strongly integrated within the region owing to the expansion of US transnational corporations for which the continent is a meaningful production and marketing zone. Otherwise, it is generally more integrated in the global economy than an identifiably continental regime of accumulation. Trade and investment have increased substantially but separately along the US–Mexico and US–Canada axes, with trinational automobile supply chains providing a notable exception.
It is perhaps this last point that is most salient for contemporary thinking about North America as a region. Indeed, after more than two decades of the NAFTA as the underwriting architecture of “region”, it is not hard to sustain the argument that North America was, and remains, composed of two bilateral relationships each anchored by Washington. One important problem in fostering trilateralism has been the historical ambivalence embedded in relations between Canada and Mexico (Pastor 2011: 156–8).
Table 3.5 Export Development Corporation, NAFTA by the numbers
Mexico |
|
|
Trade: $453.7 billion in exports, 72.6% of all Canadian exports, largest trading partner, $348.5 billion of all imports. 15% of all US exports bought by Canadians, top export market for 32 states, second largest for nine other states. Investment: $474.4 billion in Canadian direct investment in the United States, 45.2% all of Canada’s investment abroad. $392.1 billion US direct investment in Canada, 47.5% of all direct investment in Canada. Employment: 595,547 Americans employed by Canadian affiliates. 1,202,085 Canadians employed by US affiliates. Travel: 40,989,135 trips by Canadians to the United States. 23,985,377 trips by Americans to Canada (2016). |
Trade: $8.8 billion in exports, Canada’s third largest trading partner, and 5.5% of all Canadian imports 10% annual growth in exports to Mexico since 1993, sevenfold increase in bilateral trade flows. Investment: $16.8 billion of Canadian investment flows into Mexico, or 1.6% of Canada’s foreign stock. $1.7 billion of Mexican direct investment in Canada, or a 0.2% share of all foreign investment in Canada. Employment: 65,746 Mexicans employed by Canadian affiliates. 3,239 Canadians employed by Mexican affiliates. Travel: 1,926,000 Canadians visited Mexico. 252,218 Mexicans visited Canada (2016). |
Source: Export Development Corporation of Canada, “NAFTA by the numbers: where we stand as the renegotiation begins”: https://edc.trade/nafta-by-the-numbers/#sub-one (accessed 20 February 2019).
To be clear, Canadian and Mexican ambivalence towards one another is just one of many complicating factors in building on the NAFTA. Yet it has been both important and sustained. In spite of having many shared interests in Washington, Mexicans and Canadians know very little about each other beyond interactions on the beaches of Cancun every winter.14
Table 3.5 summarizes the points made by Canada’s Export Development Corporation as to the importance of the NAFTA as the three countries entered negotiations in the spring of 2017. It was intended as way to emphasize the importance of the NAFTA to Canada and that it ought to remain trilateral. However, it also starkly depicts both the depth of Canada’s bilateral relationship with the United States and the shallowness of its relationship with Mexico.
Source: Statistics Canada, “Canadian international merchandise trade: annual review, 2017”: www150.statcan.gc.ca/n1/daily-quotidien/180606/dq180606c-eng.htm (accessed 20 February 2019).
Table 3.6 Annual merchandise trade: Canada’s top ten principal trading partners (seasonally adjusted, current dollars)
The growth in aspects of Canada–Mexico relations since 1994 is positive, but it began from a very modest base. Some of Canada’s most recent merchandise trade numbers are presented in Table 3.6. Mexico is Canada’s third largest trading partner (exports plus imports), but not significantly so given its status as a NAFTA partner. Moreover, in 2016/17 trading relationships with non-NAFTA partners were quickly catching up.
However, Canadian and Mexican ambivalence towards one another was on full display in the years just before and after the September 2001 terrorist attacks on the United States and the advent of security as the main driver of the North American agenda. In 2000 Mexico had a momentous election that for the first time in 70 years brought a peaceful transition of power to a party other than the Partido Revolucionario Institucional. The new president, Vicente Fox of the Partido Acción Nacional (PAN), immediately began putting proposals on the table to reinvigorate the NAFTA and North America, including the previously noted social cohesion fund similar to that employed in Europe (European Commission c 2019). In the United States, President George W. Bush was initially receptive to some of Fox’s ideas, but Canada remained cool.
When 9/11 altered the North American agenda, Ottawa and Mexico City went their separate ways. Each concluded border security accords with nearly identical sets of points, principles and action commitments. They even had nearly identical names: the Canada–US Smart Border Declaration and the US–Mexico Border Partnership Action Plan (Department of State 2002a, b). All three briefly came together again under a trilateral banner of sorts in the form of the deeply flawed, and ill-fated, North American Security and Prosperity Partnership in 2005 (Anderson & Sands 2007). Relations between Mexico City and Ottawa soured again in 2009, when Canada suddenly imposed a new visa requirement on Mexican nationals, too many of whom, it was claimed, were abusing Canada’s asylum rules. The new visa requirement effectively cut off an embryonic north-bound leisure travel market (Mexico Institute 2014; Pastor 2011: 165–6). It was all part of a broader “rebilateralization” process, which accelerated when Stephen Harper was Canadian prime minister (2006 to 2015). Several of the prime minister’s main advisors believed Canada advanced its interests in Washington more effectively without Mexico alongside (Anderson 2016).
As all traces of the trilateral SPP were removed from government websites in 2009, Canada and Mexico advanced their respective bilateral tracks with Washington, often on the exact same issues, and giving their initiatives nearly identical names: Canada–US Regulatory Cooperation Council (February 2011), US–Mexico High-Level Regulatory Cooperation Council (March 2011), US–Mexico Framework on Clean Energy and Climate Change (2009), Canada–US Clean Energy Dialogue (2009). After his election victory in 2015, the new prime minister, Justin Trudeau, promised to reverse course with respect to Mexico, eventually making good on his promise to relax the visa travel requirement (Office of the Prime Minister 2016).
The USMCA and the end of trilateralism?
The show of solidarity between Canada and Mexico has not fared well since the election of Donald Trump.15 The American threat to withdraw from the NAFTA in early 2017 prompted some early shows of Canadian–Mexican solidarity when that threat morphed into renegotiations. Yet Canada mysteriously disappeared from the negotiations in the summer of 2018, only to rejoin after the United States and Mexico announced the completion of a bilateral agreement. As also detailed elsewhere in this volume, the final text of the USMCA retains many of the trilateral elements found within the NAFTA, but also represents a significant erosion of the trilateral architecture of region that the NAFTA augmented. Specifically, dispute settlement over antidumping and countervailing duties remains in place only for Canada and the United States; governance of investment disputes is now a patchwork of rules applying differently depending on the countries involved; and rules of origin have become more onerous for all, but especially for Mexico, because of a new a new minimum wage requirement and political commitment to reform Mexican labour law (Martin 2019).
1. National Geographic Society, “North America: physical geography”: www.nationalgeographic. org/encyclopedia/north-america-physical-geography (accessed 10 June 2019).
2. WTO, “Regional trade agreements”: www.wto.org/english/tratop_e/region_e/region_e.htm (accessed 10 June 2019).
3. European Commission, “Schuman Declaration – 9 May 1950”: https://europa.eu/european-union/about-eu/symbols/europe-day/schuman-declaration_en (accessed 10 June 2019). Although French foreign minister Robert Schuman “declared” the creation of the ECSC, Jean Monnet was the organization’s founding president, from 1952 to 1955.
4. In late 1999 the World Trade Organization issued the last of several rulings on the compatibility of the Auto Pact with the multilateral trading system, effectively putting an end to the operability of the last provisions of the pact. However, by then the North American auto sector had become so integrated that cars had come to be called “industrial tourists” because of the frequency with which they crossed the border. See Tong (2017).
5. European Commission, “European Social Fund”: http://ec.europa.eu/esf/main.jsp?catId=35&langId=en (accessed 15 February 2019).
6. European Commission, “Cohesion Fund”: https://ec.europa.eu/regional_policy/en/funding/cohesion-fund (accessed 15 February 2019).
7. Department of Finance, “Federal support to provinces and territories”: www.fin.gc.ca/fedprov/mtp-eng.asp (accessed 15 February 2019).
8. European Commission, “Erasmus+”: https://ec.europa.eu/programmes/erasmus-plus/resources/documents/erasmus-annual-report-overview-factsheets_en (accessed 18 February 2019).
9. See www.american.edu/centers/latin-american-latino-studies/north-america-research-initiative.cfm (accessed 18 February 2019).
10. See https://sts.asu.edu (accessed 18 February 2019).
11. See www.jfki.fu-berlin.de/en/index.html (accessed 19 February 2019).
12. See Government of Canada, “Canada Research Chairs”: www.chairs-chaires.gc.ca/home-accueileng.aspx (accessed 18 February 2019).
13. See European Community Studies Association – Canada, “Jean Monnet Chairs”: www.ecsa-c.ca/europe-in-canada/jean-monnet-chairs-and-eu-centres-of-excellence (accessed 18 February 2019).
14. In November 2018 alone some 40,000 Canadians travelled to Mexico (Statistics Canada 2019).
15. Mexico’s Vicente Fox expressed his own concerns about Canada’s steadfastness in an interview in November 2017, warning Justin Trudeau not to be “like Judas” over NAFTA – an apparent biblical reference to treachery and betrayal. See BBC News (2017).